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Focus: SCC rulings to prompt legislative changes?

Focus on: Litigation

February 20, 2017|Written By Dale Smith

Lawyers are hailing two decisions from the Supreme Court of Canada reinforcing the rights of solicitor-client privilege and litigation privilege. However, they note that it may give rise to regulators demanding broader production powers from legislatures.

“This is another robust holding by the Supreme Court of Canada that recognizes the fundamental importance of solicitor-client privilege, particularly in response to a request for production from a regulator,” says Christopher Naudie, partner with Osler Hoskin & Harcourt LLP in Toronto, of the Alberta decision.

“From the bar, we see this as a welcome ruling and a welcome protection of solicitor-client privilege, and also a ruling that underscores that solicitor-client privilege stands at the top of [the] hierarchy of privileges and should be accorded special protection given its fundamental importance to the administration of justice.”

In the Alberta decision, the court ruled that the statutory language used by the Information and Privacy Commissioner’s office was not explicit enough to grant it access to documents under solicitor-client privilege, while in Lizotte, the court ruled that documents requested by the provincial insurance regulator were protected by litigation privilege.

In Lizotte, Naudie says that the decision provided some clarification as to the function and importance of litigation privilege. This is particularly crucial, he says, because it reaffirmed a class privilege that doesn’t depend on case-specific balancing of interests and can be asserted against third parties including regulators. That privilege can include communications with third parties, he says.

“From the perspective of the litigation bar, this is a welcome ruling because it recognizes again a robust protection in favour of litigation privilege and will be of particular help to companies or individuals that are the subject of regulatory inquiries, because they will be able to assert a broad protection in respect of their communications with counsel, experts, witnesses and other third parties who are assisting their defence, and that that privilege can be asserted against a regulator,” says Naudie.

Previously, there had been some competing authority as to whether litigation privilege could be asserted against regulators, Naudie adds.

“This pair of decisions confirm the continued strength of solicitor-client privilege and further strengthens litigation privilege,” says Adam Dodek, professor at the University of Ottawa Faculty of Law and author of Solicitor-Client Privilege, which was referenced by the SCC in the Lizotte decision. “More than a decade ago in Blank v. Canada, the Supreme Court separated solicitor-client from litigation privilege. Lizotte brings litigation privilege closer to solicitor-client privilege.”

Currently, there are instances where a regulator can request the production of documents, and in the Alberta case, the rule was that a body must produce documents “despite privilege of the law of evidence.”

The Supreme Court ruled that this statutory language was not express enough to override solicitor-client privilege, and that solicitor-client privilege is no longer merely a privilege of the law of evidence but a substantive right that is fundamental to the proper functioning of our legal system.

“For lawyers, the effect of the two decisions is that absent express statutory override, neither privilege can be effectively challenged let alone pierced by any administrative official,” says Dodek. “Only a judge has the sufficiently hallowed status to view and adjudicate privilege claims.”

Audrey DeMarsico, partner with Hansell LLP in Toronto, notes that litigation privilege is not expressly protected under the Quebec Charter of Human Rights and Freedoms in the same way that solicitor-client privilege is, and the Supreme Court ruled that it was of fundamental importance and was subject to the same interpretations that exceptions must be explicitly construed. Lizotte also has the effect of harmonizing the rules of privilege around Canada.

The decisions also follow a trend by the Supreme Court that has not only been recognizing the fundamental importance of these privileges but that any exceptions need to be construed very narrowly.

“There’s always been this tension between the need of investigators to have access to materials and the desire on the part of private parties to protect their privileged information,” says DeMarsico.

“This is really clarifying the interpretation of laws that do provide for exceptions.”

DeMarsico says that the rulings will make people more confident in their ability to respond to requests for information from government bodies on the basis that they are not going to disclose something subject to privilege unless there is explicit statutory language.

Government bodies could include the auditor general, the Canada Revenue Agency, the Competition Bureau or an information and privacy commissioner, such as in the Alberta case. Each body will try to interpret statutes as broadly as possible to get the documents they are seeking as part of an investigation.

“It gives comfort to people who have those documents because we’ve seen this before where an auditor is requesting documents and people want to collaborate with the auditor,” says DeMarsico. “It’s not clear whether something should be disclosed or not, and they don’t want to be in the position of having to debate that point with the auditor and now they don’t have to.”

With this ruling showing the need for explicit language to compel production, the question becomes whether regulatory bodies, auditors or officers such as information and privacy commissioners will turn to legislatures across the country to demand more express statutory powers to compel those documents.

“You’re definitely going to see coming out of these cases some revision to laws, likely in the context of the Income Tax Act because there have been a few cases recently,” says DeMarsico.

“Depending [on] what the priorities are in a given province, then various jurisdictions might decide to really make explicit those exceptions. That’s not necessarily a bad thing because again it gives clarity, and people don’t want to be in a situation where it’s not clear.”

Jeff Beedell, partner at Gowling WLG (Canada) LLP in Ottawa, says that given that there are information and privacy commissioners in all provinces as well as federal, he can see those commissioners asking for remedial language to make it clear their ability to compel production.

“In the Alberta case, it wasn’t that if this information was produced and reviewed that there was an intention to disclose information over which proper solicitor-client privilege was vested — it was a review process to ascertain whether the privilege was properly claimed, and it became a matter of difference between the University of Calgary and the commissioner’s office, as to the manner in which they responded ultimately to the notice to produce records,” says Beedell, who was Ottawa agent for counsel for the Information and Privacy Commissioner in the Alberta case.

“I’m sure that the commissioners want to discharge their duties,” he says. “They felt that their home statutes gave them this ability without having to go to court, so I would imagine they’re looking for some legislative discretion and consideration.”

DeMarsico adds that the major caution that people have is that if they turn over a document where it wasn’t required, it could be interpreted as waiving their privilege over the document and anybody could have access to it, which is why the demand for clear language is ultimately welcomed.

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